UK-based Hermes Pensions Management Limited this week announced that <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Butler and Brown, two of the founding directors of Hermes Focus Asset Management (HFAM) have as of 10 August 2004 given notice under their employment contracts and plan to leave the Hermes group in early November.

For some months, Hermes has been discussing internally the future ownership, strategy and governance structures for its Focus Fund and corporate governance activities.

The group stated: "Differences on these issues have led to the decision of Peter Butler and Steve Brown to leave Hermes. Hermes confirms that contrary to press speculation the differences with Peter Butler and Steve Brown did not relate to their remuneration and they will be assisting with the handover of their responsibilities as indicated above."

Peter Butler and Steve Brown also confirm that they have not to date made any firm plans relating to other organisations or the formation of any other funds to engage in shareholder activism, although they wish to remain in the governance world.

David Pitt-Watson, currently the Managing Director of the large capitalisation UK Focus Fund and also one of the founding directors of HFAM, will assume Peter Butler's responsibilities in heading up overall equity stewardship activities including Focus Funds, corporate governance and the recently launched Equity Ownership Services with effect from 11th November 2004.

John Leach, currently a director of HFAM will, on David Pitt-Watson taking up his new role, assume Pitt-Watson's responsibilities as Managing Director of the large capitalisation UK Focus Fund with Mike Weston (currently an executive director of HFAM and the senior investment professional working specifically on this fund) becoming Deputy Managing Director.

Nick Mustoe, Chief Investment Officer of Hermes Pensions Management Limited has joined the boards of both HFAM and Hermes Focus Asset Management Europe ("HFAME") in a non-executive capacity and it is proposed that Stephan Howaldt, Chief Executive of HFAME, will also join the HFAM Board as a non-executive director. Neither Peter nor Steve are executive directors of HFAME.